May 18, 2016
To: Highlands Community Church Family
Subject: Detail on the Revised Target for the Family Life Center and Financing

How and when was the original target defined?

The target of $850,000 for the project was set based upon the conceptual scoping work. We used both a highly experienced architect basing his estimate upon square footage being remodeled as well as using the General Contractor that we are partnering with doing a line-by-line estimate.

Upon approval by the Elders in December 2015, we proceeded to do the fundraising as well as the design. By doing the fundraising simultaneously with the design, we risked changing the target, even with a healthy contingency.

What are the drivers of the cost increases?

Upon our pre-permit submittal, we were told that we could use the ADA bathroom in the Early Childhood wing in the first floor, but current regulations dictate that an additional 10 inches was required between the toilet and sink. This will required us to modify the current ADA bathroom: a) take down the north wall and move it in to the already very small janitorial supply room, b) relocate utilities buried in the wall, c) remove and rebuild the angled wall with the door, d) rebuild the doorway of the janitorial supply cabinet and add a new door, e) redo the ceiling and floors, and f) yes—move the sink 10 inches. As an alternative, we looked at completely demolishing the current bathrooms off of the gym and even adding an elevator to make those accessible.

When we actually submitted our drawings for permit, the existing bathrooms were deemed to need ADA features, even though they themselves would not be accessible via a person in a wheelchair. This has driven additional features that were not planned to the existing gym bathrooms.

Next, we engaged the originally builder of the ceiling trusses of the gym to work with a structural engineer. They concluded that there was absolutely no safety factor, no margin for anything else to be added to the roof. We intended to add two Heating, Ventilating, Air Conditioning (HVAC) units to the roof. After looking at multiple alternative locations, we agreed to add retrofitted trusses, known as “sisters,” as required. Because the roof was right at the minimum design level, even adding a sheet metal visual barrier around the units added four more 56 foot trusses—so working with the City of Renton, we eliminated the visual barrier and that expense, but 10 trusses remain added to the scope.

The “no safety factor” ceiling has also driven us to add four 6 ¾” by 25 ½” glue laminated beams, 56 feet long, to support the torque placed on the roof with movable basketball hoops that will retract to the ceiling. Because a critical priority for the room is for non-gymnasium purposes, we decided it was needed to have these disappear.

Structure issues also substantially drove costs at the southern entrance to the gym that we planned to somewhat enlrge. What we figured would take one steel beam turned in to three with multiple steel posts to the floor and chipping up the interior foundation to add additional concrete footings. Although we considered abandoning the larger entry, it is still in scope.

Another structural surprise was when the design came in to add one door in the NE corner of the gym to access the long, largely inaccessible storage on the other side of the tilt-up wall. To do this, two 6” by 6” steel posts, on either side of the door, the full height of the gym were required. Given the added costs, we decided to remove the door feature and will design our storage in this area to work with the single access.

As the design work progressed, it became clear that the lower gym rooms needed to match the upcoming modernized space. The decision was made to include this space as it wasn’t originally included.

The Audio/Visual Production lighting scope of work was removed as an element from the general contractor because it needs to work well with our existing equipment and we wanted a very close hand in each stage of the process. The consultant we hired worked closely with us, trading off options of ease of operation and replacement of components when they fail. This added about $100,000 by the time we had a package that would work for all of the purposes for which we expect this facility to be used for.

The next area of scope increase is electrical with about $60,000 extra. We will work with the subcontractor over the coming weeks to see what we can do to reduce this scope and thus costs. The area does provide extensive challenges with the tilt-up concrete, existing circuits that are often overloaded, and multiple rewiring that has already occurred.

Finally, although many say that they already knew it, the existing bathrooms have no ventilation other than open doors. The HVAC scope was then expanded to include these rooms, plus the electrical room for all of the A/V equipment.

Overall, why did the target increase?

From the original line-by-line estimate, 20 of the 33 lines didn’t significantly change or came in below budget. Although our construction environment currently in our area is exceptionally over-heated, we were able to get excellent bids. However, structural and ADA requirements and the increased A/V requirements were the primary drivers of the increased costs.

How solid of a number do we have now?

It is a remodel and we need to expect changes, especially as we do the demolition and find surprises. However, we now have maximum prices from the general contractor and the subcontractors, with agreements to share in savings as we can figure out better ways to do things.

Over the next several weeks, we will be working with several contractors to remove scope or substitute materials—but we are now working with maximum prices except for the Audio Visual and Production lighting. For that package, we will be paying actual costs and closely monitoring as we go.

How do we fund the growth in scope, thus the costs?

The Elder Board acted on 5/17/16 to take $200,000 from the Operating Reserves to put towards this project when they raised the project target to $1.2 million. Operating Reserves are similar to a combined checking and savings accounts. We track our reserves in terms of budget need weeks. We are currently need $66,122 each week to meet budget and at the end of April we are at 13.9 weeks of Operating Reserves. Variability in giving across the year and expenses has proven to be about four weeks and we never want to drop below that. We also have reserves for the unexpected crisis of about four weeks and attempt to maintain another four weeks for opportunities that come our way. So four weeks for a crisis, another four weeks for variability, and a final four weeks for opportunity leaves the sweet spot for us to operate in the range of between eight and twelve weeks of reserves. By taking $200,000 from the reserves, or three weeks, is projected to keep us just above the eight week sweet spot as we go through the coming year.

The remaining $260,000 of the funds needs to come from additional giving to the project. What will we do if the additional funds do not come in as we expect? We will use a line of credit and find additional budgeted areas in which to reduce, likely paying the loan off over a few years.

Final thoughts?

Although always disappointing to see the project’s cost grow, it is clearly God’s sovereign grace to bring to light a structural risk with the gym roof that was hidden to us. And although we have stripped scope where we concluded that the costs didn’t justify the expense, we believe that we can deliver a quality space that will serve generations to come.

We also have architectural and a general contractor team of strong Christ followers who are absolutely committed to this project.

Finally, we request your continued financial and prayer support for this critical project.

Thank you for investing in the ministry of Highlands. We are humbled by God’s continued blessing and opportunities before us to continue to help people find and follow Jesus.

In Him,

Scott Kaseburg
Executive Director
Highlands Community Church